Markets News

AerCap cancels nine more MAX orders, confident on air travel recovery

DUBLIN, Nov 10 (Reuters) - Leasing giant AerCap said on Tuesday it had cancelled nine more orders for the grounded Boeing 737 MAX aircraft, but gave an upbeat assessment of the “steady recovery” in air travel that it believes will provide opportunities for lessors.

The additional cancellations bring to 24 the total MAX orders the world’s largest aircraft leasing company has halted, leaving 71 of the jets still on its order book alongside five currently on lease.

The U.S. Federal Aviation Administration has said it is in the final stages of reviewing proposed changes to the MAX, which three sources briefed on the matter told Reuters on Monday could lead to a lifting of its grounding order as early as Nov. 18.

AerCap reported a third quarter net loss of $850 million on Tuesday. That was primarily driven by a $973 million non-cash write-down of flight equipment and goodwill as cash flow from operating activities rose by 76% quarter-on-quarter to $541 million.

The Irish-based lessor also saw a significant reduction in requests to defer rental payments for leased aircraft, chief executive Aengus Kelly said, adding that positive news on a COVID-19 vaccine should provide a further boost to airlines whose finances have stabilised.

Cash-strapped carriers will nevertheless have to focus on repaying debt and unwinding government support rather than buying new aircraft when they emerge from the COVID-19 crisis, he said.

“Prior to this year, there were still airlines whose strategy was to own their own fleet. That strategy has proved itself to be redundant,” Kelly told an analyst call.

“We have already heard from a number of airlines that going forward plan to rely more on leasing. Over the next few years as the industry recovers and airlines focus on repairing their balance sheets, we expect to see significant sale-leaseback opportunities.” (Reporting by Padraic Halpin; Editing by Mark Potter)